We’ll remember Andy Burnham’s Conference speech this year as the remarkable progress in welfare we didn’t get in the first two years of this Government. It is making the right wing furious because it has down well with the country. It has of course done very little for the wealthy.
There are three things that matter for those in retirement.
They are a retirement wage that increases in real terms , protection to cope with deteriorating health – and housing both in retirement and before. Leaseholders find unexpected charges a major increase in their cost of living. If you don’t think the cost of living is critical to our retirements then you don’t suffer a lack of net pay to save with.
If the right could take their anti-Burnham blinkers off, they would see that the changes announced as the Government’s welfare policies in the second half of this Government (rolling into future Governments) will allow the cost of living to fall for the majority of us That is of course will need to go hand in hand with an improvement in economic growth.
The high profile but balanced change to the triple lock
The most contentious change is a reduction in impact of the triple lock. Changes will come in in four years time and will mean that rises in the state pension only take into account wage increases occasionally. The presentation of this change by a largely right-wing process has resulted in most people thinking that the state pension will go down.
This from the Times, who have through Tom McPhail and others have been calling for the abolition of the triple lock in favour of higher mandatory contributions into private retirement savings plans.
Private retirement plans
It is of course the providers of workplace savings plans who are most indignant that they have been ignored again by Burnham.
Patrick Thomson from the pensions firm Standard Life said it will “come at a critical time for Gen Xers, with many approaching retirement with inadequate pensions, compounded by declining access to defined benefit pensions.
The move to a double lock needs to be considered alongside decisions on the state pension age and wider action such as increasing automatic-enrolment contributions.”
There is still a triple lock, just not the ratchet version that’s nearly done its job.
And as if increases in mandatory contributions to private savings plans is of interest to most people. The worry for those running them is that they simply don’t count compared to state pension funds.
The biggest announcement for people in private pensions was for the 19,000 employers who offer work to carers. They will get a Government run collective CDC pension plan where the Government is Proprietor and the benefits come from an improved funded pension scheme over the savings plans they’re in today. Prospect’s research that a move to CDC is equivalent to a 3% pay rise. Let’s hope that many more will have the prospect of better pensions in place before the end of the decade.
Better pensions not more expensive workplace savings plans
At a time when the cost of living is as much a problem for small businesses as their staff, a 3% effective increase in wages by moving to a better pension plan is good news. The news came from Yvette Cooper and is linked to the proposal to improve the deal for those who need long term care.
This is planned to increase in the next Government but planned in this. Again the reaction of right-wing commentators was sceptical that it was both too little and too much
The crippling care costs will be less than today
Once again, the right wing press pick up on the balanced approach put forward by Burnham as both too little and too much. It is too little to let wealthy house owners off paying health care from savings, equity release or the sale of a house. It is too much help for those who have a little money and who find the cost of being ill at home or in residential care reduces their final years to penury.
Which brings us onto housing and the cost of living for leaseholders
This was the first mention by any Government of “leaseholders” and the pressure they are under. The cost of being a leaseholder or of renting from a leaseholder is increasing because of rapacious service charges and the fleece-holder tax called ground rent. It looks as if Rayner and Burnham between them are getting the Cabinet behind them and will get a bill in place by the end of the year that will reduce the power of those who invest in freeholds to find the easy money at an end.
It would seem that there is still an attempt to defer change on service charges by a call for a commission to look into the matter. Those millions of leaseholders know the impact of ludicrous charges levied on them and need no time-wasting commission.
This looks to me that leaseholders are 3-0 up at half time but the freeholder lobby are good at coming at you from behind.
Proper welfare reform at last – don’t knock it.
Burnham’s speech will bring welcome advantage for those who want to save more for their retirement , for those who are suffering from getting too little help for social care and for leaseholders paying rent or direct fleece holder charges.
What papers like the Times and Telegraph are concentrating on is the cost that will fall on them in future budgets to pay for these improvements.
Critics are calling Burnham’s strategy high-risk. To me , the risk is that we as a country do not grow. We need to see a return to collective pensions and we need the resulting tax-flow funding long term care. We need to see the cost of living reducing by getting housing costs down.
This seems to be a much better way of doing this than
- by increasing mandatory payments into workplace pensions,
- by abolishing the state pension’s triple lock
- persisting with a failure failure to get to grips with social care
- and an abandonment of leaseholders to a system of rapacious freeholders.
We’ve hoped for welfare reform like this all century, now that we’ve got it, we should welcome it and do our bit to make it happen. That means stopping moaning and accepting change.